What a Nobel day to be back

[Cross Posted from the New School Economic Review – original here]

Courtesy of Banx at the FT

Back at the keyboard after a hectic late summer which included getting a final sign-off on the thesis, so that is all done, dusted and deposited in the university library. And what a day to be back. In a few hours they will announce who is going to win the Prize for Economics in memory of Alfred Nobel, and if Fama gets it this year I think it will be good fun. He was odds on favourite two years ago, but since the crash and recession all odds are off.

Harvard even had an on-line pool, but had to shut it down due to legal reasons. Oh well, we’ll know in a few hours. Either way, we’re back to our blogging ways now that term has properly started and there can be no more conference distractions.

Unfortunately, we have been advised by Harvard University to immediately shut down the Nobel pool due to legal reasons, and we have decided to comply with this request. We will fully reimburse the money of all participants, and we apologize for any inconvenience this creates for you. All participants will be contacted by email. (http://www.people.fas.harvard.edu/~pollmann/nobel/)

A call to arms for Historians and Economists

[Cross-posted from the History of Economics Playgroundoriginal here]

The Marshall Lectures often provide thought provoking talks and one talk in particular spoke to me looking at the relationship between history and economics: The speaker is a well known historian and he said exactly the right thing:

The only thing that encourages me to open my mouth, other than the pleasure of being on record as a Marshall Lecturer, is the feeling that, in the present state of your subject, economists may be prepared to listen to lay observations, on the ground that they cannot be less relevant to the present situation of the world than some of what they write themselves. Especially, one hopes, they may listen to a layman who appeals for a greater integration, or rather reintegration, of history into economics.

But Eric Hobsbawm said this in the 1980 Marshall lecture – I guess some progress has been made.

Who does original research?

[Cross posted from History of Economics Playgroundoriginal here]

INET is all about thinking new things, and indeed academia is supposed to inspire great thoughts. So why are there so little original research in economics? I don’t mean in total, but think of it as a percentage of the total output. The truly great research is pretty thin on the ground if you think of it that way, and in fact, even the mildly interesting is pretty thin. All this introspection was brought on by reading Richard Hammings talk “You and your research” (given some 25 years ago) – where he asks us to do Great research. ‘Us’ are the social scientists, scientists or all researchers out there. It is not clear to me that we economists follow his advice at many stages of our careers.

I am starting to think that doing original research is something we need to choose to do. And we need to actively choose it. Reading Dan Pink’s book on career advice: One of his key points is to stop doing jobs that are instrumental – you do them to achieve something else – and make sure you do a job (or research) which is fundamental – where we do things because we are interested. That rings some bells. Smith, Marx, Bentham, Marshall, Leontief, Keynes, Friedman and others were definetly fundamentalists in this sense. Deirdre McCloskey has talked about exactly this in economics, so perhaps there is something more fundamental to it. I think Dan Pink’s advice carries over, so I share it, via Garr Reynold’s slides here (but check out the book, or website).

Otherwise, we will all probably end up in the academic cycle that Jorge Cham has elegantly illustrated below. And I guess we all want to do great research – right?

Why it’s all philosophy

[Cross-posted from New School Economic Revieworiginal here]

So a few weeks back I was reading xkcd.com and while hovering the mouse over the cartoon (#220) I was told the following:

Wikipedia trivia: if you take any article, click on the first link in the article text not in parentheses or italics, and then repeat, you will eventually end up at “Philosophy”.

I thought that sounded like a good game, and a really nice urban legend so I went ahead and looked at economics… It gave the following string: Economics -> Social sciences -> fields -> academic -> community -> living -> life -> objects -> Philosophy… Admittedly I found a couple of loops, but then someone trumped it all and built a script to check how far this link to philosophy holds…  1,000 iterations later only 11 did not close at Philosophy. ELEVEN!  (check out the mapping here) I think that is pretty good proof that life boils down to philosophy.

Of the 11 left-over they ended in seven ‘sinks’ according to New Scientist: Architecture, gender, German reunification, Grail message, Iraq war, pragmatism and process manufacturing.  Not sure what that that could mean?

When the U.S. last defaulted

[cross-posted from History of Economics Playgroundoriginal here]

Two things seem to be taken for granted in the current debt-ceiling debate: 1. The parties will come to an agreement on the debt ceiling because 2. These United States have never defaulted and will not start now. Well, Lexington has eight pretty good reasons why an agreement is not inevitable and as far as I can tell, the United States has defaulted in the past, and we need to recognize that fact…

The historical trick revolves around ‘these united states’ because these 50 States are somewhat recent. Hawaii and Alaska would finalize statehood in ’59. but various make-ups of the USA have indeed defaulted or re-structured its debt. Most recently – I think – was in 1933 when the then 48 State government refused to repay the gold annuity it owed to Panama. This was eventually repaid in 1936. I take that observation, and many more from Rogoff and Reinhart’s book (2010: 112-3) which I have commented on earlier.

We can add to that list debt restructuring in 1790, where interest was deferred by the government for ten years. Then there are State cases where the central government allowed default on debts and – I would suggest – implicitly accepts government default: 1841-42 when three States repudiated their debts altogether and 1873-83/4 where ten states were in default, with West Virginia not settling its account till 1919. One could throw in the confederate army debentures and bonds which for various reasons were never repaid to foreign investors, but whether that is legitimate US debt, I am not sure.

My point is simply that the USA has deferred, restructured or cancelled its debt before. If Lexington is right that “compromise may still be possible, but there is nothing inevitable about it,” then on track record you might expect to see an announcement to delay repayment of certain debts, for a long while, on 2 August.

Disdain or paranoia for historians of economics

[Cross Posted from The History of Economics Playgroundoriginal here]

The organizers of Duke’s Summer Institute on the history of economics were so worried that students might be embarrassed to ask their supervisors for a letter of recommendation, or that the supervisors would say it’s a waste of time to study history, so they took a last minute decision to cancel the need for a letter of recommendation. Despite the fact that they offer student stipends of $2,000 and that it is taught by top class academics. In Realpolitik and economic terms, the need for a letter of recommendation is of course a barrier to entry, so maybe it was not an optimal screening mechanism to begin with, but it seems – to me – a little paranoid.

I understand the strategic thinking that we want to encourage students to write part of their thesis with a historical method and even teach history… But doing that behind the supervisors back might not be the most cunning of tactics. Or perhaps there is such widespread disdain for the history of economics that this is the only way. For my part I can’t see that things are this bad State-side – but I may be isolated from the worst of it here in Europe?

Somewhere between INET’s support, the recent crisis and the widespread demands for more history and context in economics teaching, perhaps the way forward would be to play on those strengths, rather than hide our light under a bushel. If we keep hiding, the current moment will pass and we can go back to the tactics of cloak and dagger, but until then, maybe we need a slogan along the lines of: “We’re here, we’re Historians, get used to it!” – Well, maybe not those words exactly, but you get the gist.

We are moving the playground – come join us

[Cross Posted from The History of Economics PlaygroundOriginal here]

Some time ago we got an e-mail from the guys at the Institute for New Economic Thinking (INET) asking if we were interested in shifting our playground in their direction?  Well, as of Sunday we have moved our swings and slides to the brand new ineteconomics.org/blog/playground.

New shiny home, same Kids

So what does that mean? First off we intend to continue in the same vein and in keeping content control we think not much is changing… As usual, new young and restless (and good looking) historians will join as others move on, so the only change is if you are using RSS feeds, then you will need to update it. Other than that, it’s the same playground – only shinier.

OK, so it’s a lot shinier. In April – as you’ll know – they agreed to ship us to the INET conference, and our shiny badges means we  get interviews with people who we would not otherwise bump into. We’ve also been given a video editor who is working on the interview films which will be ready soon! Then they asked if we would be interested in covering the history related INET grants and presentations, meaning travel money and hopefully interesting blog posts. Reality is that we’d be reading this stuff anyway, but somehow INET agreed to fund our trips – I fear they missed our reservation price of zero. That said, we may have missed their reservation price too, as part of the deal includes a $25,000 grant to pay for research, travel and other work related to the blog and history, so expect more archival stories and maybe even a comic. All-in-all, we think this is a great opportunity, and if it all goes haywire, we’ll always have this spot.

So on behalf of everyone, I hope you like where we are taking this, and that you’ll join us. I noticed that Pedro and Yann have already started posting over on ineteconomics.org/blog/playground, so please, come over and play.

INET grants for New Schoolers

[Cross posted from the New School Economic ReviewOriginal here]

Rejection is a standard – if frustrating – part of academic life, but with INETs (Institute for New Economic Thinking) Spring 2011 grant money just being announced there is much to celebrate from a New School side of things. From 400 submissions and a selected 23 grants, the New Shool economics faculty picked up one grant and the alums got another. Not too shabby for a global competition!

Prof. Anwar Shaikh’s proposed book on Turbulent Dynamics and Hidden Patterns wants to look at the world from a perspective of ‘magnificent dynamics’… I have to be honest and say that I am not entirely sure what that means, but a quick browse revealed this review article which helps. I hope we won’t lose Anwar for too long as he attempts the full manuscript, for which an outline is provided:

The book’s aim is to demonstrate that a revived form of the “magnificent dynamics” of the classical economists can explain the actual patterns of developed economies involving relative industrial prices, stock prices and interest rates, exchange rates, growth, cycles and inflation. The book develops a classical theoretical approach to these and other fundamental economic issues which it then contrasts to the corresponding theoretical arguments in the neoclassical and Keynesian traditions. It also confronts all theories with the relevant empirical evidence. It is my hope that this will encourage others to analyze the “two-sidedness” of markets: strong patterns achieved through turbulent processes.

Also in the list is one of our recent alumni Ph.D. Students, Stephen Kinsella currently at Limerick University in Ireland where he is collecting a lot of (well deserved) accolades. He wants to build a stock-flow consistent model of Ireland. It looks like an exciting and ambitious project, which I suspect follows on from other work in this area which Steve has been doing and is forthcoming in EEJ among other places (see the stock-flow-consistent model papers here).

No model helped predict or understand why Ireland’s economy has collapsed so spectacularly since 2007. This is because the real and financial sides of the economy aren’t modeled using current tools. Using INET funds, we will build a stock flow consistent model for Ireland to solve this practical problem, as well as a theoretical problem in the estimation of large stock flow consistent models highlighted in the literature. The project is important because previous modeling methods have largely failed, and because small open economies in an era of globalization all over the world face the same challenges as Ireland.

All in all good news, and I hope that we can continue this kind of success going forward. I wonder if any of the grad students submitted a proposal or worked with the faculty on one? It’s good experience and a great opportunity to get a yes.

PhD Comics… The Movie!

[Cross-posted from the New School Economic Revieworiginal here]

Following on from the Simpsons and Family Guy it appears that PhD Comics are planning a film… This may be just a gag but hey – if it is, I am not going to complain because the trailer is good enough as it is 🙂

PHD Movie Trailer from PHD Comics on Vimeo.

That might also explain their absence of comics recently…

15 TED talks for econ nerds

[Cross-posted from the New School Economic Revieworiginal here]

At least that’s what the headline says on this post by Liz Nutt over at the AccountingDegree.com blog who kindly dropped me an e-mail pointing to it and encouraging me to re-post. I have to admit there’s a lot of good stuff in here, my personal favorites include Hans Rosling and Collier’s talk is worth a listen. Steven Levitt is a question of your tastes, and I am now off to learn about the economics of terrorism (the presenter has gotten some good reviews in the past) and the talk on Bernie Madoff.

Through these talks, you’ll get to hear some of the world’s foremost experts on behavior, economics, and politics discuss a wide range of issues, from inequality to consumerism– often with an interesting and unique take on the subject matter that’s perfect for stimulating your inner (and not-so-inner) geek.

Loretta Napoleoni: The intricate economics of terrorism: You might be surprised at the economic and political issues that go on behind terrorist organizations. In this talk  you’ll learn about the money laundering, dirty deals and political subterfuge that goes on all over the world, helping to fuel terrorist organizations.
Steven Levitt analyzes crack economics: Freakonomics author Steven Levitt presents some interesting data on the financial aspects of drug dealing in this talk, showcasing the dangers that go along with the work– sometimes with little or no reward for anyone outside of the top echelons.
Laurie Santos: A monkey economy as irrational as ours: Humans can behave pretty irrationally when it comes to money or just making decisions in general. Laurie Santos shows in this talk that we’re not the only primates that make silly decisions– some of our closest genetic relatives do so as well.
John Gerzema: The post-crisis consumer: In this talk, you’ll hear about a surprising possible upside to the recent financial crisis– more thoughtful consumers and businesses who are adapting to meet their needs.
Hans Rosling: Asia’s rise — how and when: Today, Asian nations like China and India are economic powerhouses, and could soon outstrip the US and many other nations– something researcher Hans Rosling demonstrates in an amusing and clear way in this talk.
Paul Collier on the “bottom billion”: Much attention is focused on the wealthy and successful, but what about the world’s billions of individuals living in poverty? This talk from Paul Collier discusses some ways that we can all work to help close the gap between the rich and the poor.
Nandan Nilekani’s ideas for India’s future: Discussing India’s recent economic success, author and IT expert Nandan Nilekani addresses what the country will need to do to maintain its recent progress in the coming years.
Martin Jacques: Understanding the rise of China: Economist Martin Jacques addresses the rise of China as an economic power in this talk, explaining how the country has changed, what has allowed it to do so and how it will continue to change in the future.
Amory Lovins on winning the oil endgame: Because so much of the world depends on oil it is an incredibly precious commodity, one that makes us very dependent on international trade and certain regions of the world. Here, Amory Lovins explains his plan to wean the US off of oil and start building a different kind of energy industry here at home.
Eleni Gabre-Madhin on Ethiopian economics: Ethiopia is currently the world’s largest recipient of food aid but Eleni Gabre-Madhin doesn’t think it should have to be that way. Instead, she lays out a plan to help revolutionize the economy of the country, creating wealth and large commodities market.
Kevin Bales: How to combat modern slavery: From an economic standpoint, slavery is a quick and easy way to make more money but from a moral standpoint, it’s simply reprehensible. Unfortunately, many businesses around the world still operate and profit from slavery– something activist Kevin Bales wants to change, making significant economic and political changes to limit the possibility of slavery around the world.
Misha Glenny investigates global crime networks: An expert on organized crime networks worldwide, Misha Glenny explains how these groups now make up 15% of the global economy– a frightening statistic for any law-abiding citizen.
Geoff Mulgan: Post-crash, investing in a better world: While the money has already been spent today, Mulgan presents an interesting option for those stimulus dollars that might have been a better solution in the long run: invest them into new, sustainable businesses, focusing on the future instead of the past.
Peter Eigen: How to expose the corrupt: Corruption is a pretty common thing worldwide when it comes to politics and business, but it’s not something that’s ultimately good for the citizens of any nation in the world. Here, Peter Eigen shares his mission to improve transparency and fight corruption.
Matt Weinstein: What Bernie Madoff couldn’t steal from me: Matt Weinstein lost his life savings to scammer Bernie Madoff, but in this lecture, he shares some of the lessons he’s learned from the experience and the wisdom financial disaster helped him to gain